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Billions per Second

July 31, 2002  - By
Image: GPS World

“Remember that time is money.”

—Advice to a Young Tradesman, 1748

For those who take Benjamin Franklin’s admonition very, very seriously, there is now GPS. Network managers for financial institutions recognize that GPS provides the fastest, best, and cheapest source for exact time determination.

In a white paper, “The Importance of Network Time Synchronization,” Paul Skoog of TrueTime, Inc highlights precise timing’s critical role in transaction processing (see ). Financial institutions from mortgage brokers to stock markets use millions of servers and workstations of all types and functions, networked together and executing a blinding rush of transactions, at rapid changes of value from second to second. In just one instance of everyday fluctuations, the chart above depicts the closing minutes of Intel trading on the New York Stock Exchange stock, November 14, 2001— at an average rate of six transactions/second, and up to 20 per second during intense trading.

Frequently traders, both business and individual, call their brokering institution to dispute the recorded value of a transaction. In resolving these issues, the time of transaction is critical. Even more critical is the order of the transaction among thousands or millions of others.

The National Association of Securities Dealers (NASD) now requires its 5,500 members in 82,000 U.S. branch offices to time-stamp all transactions within a 3-second accuracy or better.

Brokers actually have a higher requirement than that, driven by the need to place transactions in a correct sequence of execution, particularly if there are many nearly simultaneous transactions. Since computer operations happen automatically and quickly, system clock resolution must be less than the minimum transaction composition and transmission time, leading to a need for 5–20 millisecond resolution.

Computers compute. They do not keep time very well. Based on inexpensive oscillator circuits or quartz crystals, they can easily drift seconds or minutes per day. Many clocks continually drifting apart put network operations at risk.

The use of GPS as a time-reference standard by financial houses from stock exchanges to offshore banks constitutes another reason the Heritage Foundation advises designating GPS as a critical infrastructure: it underpins the aggregate financial network — and, some might argue, Western society itself.

Future Stock

Gerard Lyons, Jim Duggan, and Paraic Quinn at Ireland’s University of Galway are investigating current and possible future applications of distributed time-synchronization to enable transaction timestamping in an agent-based system. They have set up a “Stratum-1” (defined as microsecond-accurate) Network Time Protocol (NTP) server, used by other NTP servers and clients in Europe for time synchronization.

These researchers state that “tightly-coupled, vertically-integrated supply chains are giving way to more fluid ‘value constellations’ connecting suppliers, intermediaries and customers through real-time information conduits.” They predict the development of “virtual enterprises, temporary networks of companies that come together quickly to exploit fast changing opportunities. An intelligent electronic broker might create a virtual enterprise to execute a single transaction.”

In this vision of future e-commerce, timing is everything .

Manufacturers

The New York Stock Exchange, the World Bank, and other financial institutions utilize TrueTime’s (now Symmetricom) TimeVault product line of NTP servers. Datum (also part of Symmetricom) and Spectracom Corporation, among other companies, also supply NTP servers to financial houses. The University of Galway’s timeserver uses Trimble’s Acutime 2000 GPS synchronization kit.

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